Pandemic Reveals Weakened but Resilient UK Economy
Britain’s economy has taken a beating since the first wave of the COVID-19 pandemic. Following the first lockdown in late March 2020, the world’s sixth-largest economy contracted more than its peers and is now 8.5% smaller than it was before the onset of the pandemic, according to Reuters UK.
Following Britain’s second lockdown, announced in October 2020, the economy continued to decline intoNovember of last year, but it was less than forecasters had expected. Output among the services industries fell 3.4% from October as all non-essential shops, including restaurants and pubs remained shut. Amid the fall in consumer services, however, construction and manufacturing grew by 1.9% and 0.7% respectively, according to Reuters data.
Coming after the January announcement of a third lockdown, Britain’s economy is expected to shrink in the first quarter of 2021. This comes as business grapple with post-Brexit trade restrictions with the EU. Britain’s finance minister, Rishi Sunak stated that things would get more difficult before they got better and that recent economic figures highlighted the scale of the challenge. That being said, glimmers of hope are beginning to make their way to the surface.
Signs of resilience
With so many negative statistics pouring out of the UK, it is no wonder many feel pessimistic on the economic outlook. But in light of its recent decline, Britain has showed promising signs that it can weather this storm.
Observers have pointed out that a double dip recession appears less likely, now, with schools remaining open and businesses adapting to social distancing measures. And with Britain’s vaccine program being rolled out more efficiently than other European countries, there is added reason to be optimistic.
Paul Dales, Chief UK economist at Capital Economics said that there has been growing immunity to the lockdowns, suggesting that the economy may not be in such bad shape overall. That said, BoE Governor Andrew Bailey has mentioned that it was still too soon to know whether further stimulus would be needed.